John McCain Is A Rational, Calm Human Being

He's not a complete friggin hothead or anything.

McClatchy has more on McSame's volcanic temper. (h/t Firedoglake)

Le Sigh, Le Moan

Well, I figured with McCain's shiny new convention bump lead in the polls the Republicans are getting cocky and the concern-trolling is underway. I just didn't figure it would be Ed Rollins blowing his wad first.

Ten days ago, Sen. Joe Biden was the most brilliant vice presidential pick imaginable. He was going to add the experience and foreign policy credential that Sen. Barack Obama's thin resume was missing.

The so-called expert commentators were arguing that blue-collar Joe was going to guarantee Pennsylvania (because he was born in Scranton) and other states and get Catholic voters because he is a pro-choice Catholic.

I guess they forgot that Joe didn't do so well with Iowa Catholics (23 percent of the population) when he campaigned there for more than a year in the Democratic caucus race. But then getting less than 1 percent of the vote and coming in fifth place showed he didn't do real well with any voter group in Iowa. Nor did he do well anywhere else, other than Delaware.

Then, after Sen. John McCain chose Alaska Gov. Sarah Palin, people laughed and said Biden was going to wipe the floor with Palin in the vice presidential debate. Now, after her incredible convention speech, Biden is saying that he's the underdog because he's not a very good debater.

If Obama had done the smart thing, he would have picked Sen. Hillary Clinton for vice president. If he had, he would have united his party for sure and energized his base.

He just couldn't do it and maybe thought he didn't need to do it. He was wrong. That choice would have meant that McCain probably wouldn't have picked Palin. And if McCain had picked anybody else from his shortlist, the Republican convention would have been boring, and the party's base would not have been motivated.

The one thing we know for sure -- the selection of Biden did the least to enhance any ticket since George H.W. Bush picked Dan Quayle back in 1988. This is turning out to be another election the Democrats were convinced they couldn't lose. So far, the selection of Palin has been a game-changer and has energized my party like no one since Ronald Reagan did four decades ago.

The polls are back to even again. The only difference is the Republicans now have a communicator to match Obama and the Democrats have on their ticket an older veteran of Washington politics to match McCain's experience. The reformer Obama who was going to be the candidate of change is now running with Mr. D.C. establishment.

For the record, my money was on David Brooks or Dick Morris, but Ed Rollins is the same thing. Gotta love a GOP operative comparing Biden to Dan Quayle.

This Seems Familiar Somehow

As Jeff Huber points out today, our little illegal war with Pakistan is getting rather out of hand.

U.S. special forces attacked militants in a Pakistani village near the Afghan border on Wednesday, according to a September 3 New York Times article by Pir Zubair Shah, Eric Schmitt and Jane Perlez. The militants undergo a remarkable transformation in the course of the story.

In the headline they're "Militants." In the lead sentence they're "Qaeda militants." Three paragraphs in the bad guys are "Taliban and Al Qaeda." Several paragraphs later they're just "Qaeda" again, then they become just "Taliban," then "Taliban and Qaeda." In the last three paragraphs they're plain old "Taliban" and "Taliban" and "Taliban."

I don't buy for a second that all this name changing is merely sloppy writing on the part of NYT reporters. It has all the earmarks of being part of the long term, ongoing information operation designed to give the American public the perception that everyone Mr. Bush attacks in his woebegone war on terror had something to do with 9/11. If "Qaeda" attacked New York and Washington and every A-rab and A-rab wannabe Persian from Iran who we don't like is part of "Qaeda," then every A-rab and A-rab wannabe we don't like is responsible for 9/11.

Propaganda catch phrase-wise, "Qaeda" is a convenient substitute for "Commie," and if you don't hate the Qaedas and the Islamofabulism they stand for, then you're a Qaeda sympathizer, you dirty low down haji hugger.

It's also apparent to me that this info operation originates in one of the Pentagon truth ministries that sprang from Donald Rumsfeld's short lived Office of Strategic Influence. I hope you find the idea of the Pentagon running a deception operation on the American public shocking, but that's not the most shocking thing covered in this Sept 3 NYT story.

More shocking is that the story discusses what amounts to the Department of Defense assuming the authority to declare war, and even more shocking than that is that nobody seems to realize they're doing it and/or they don't appear to care.

No, nobody does seem to give a damn. Nor does anyone seem to recall the irony of Barack Obama getting savaged in the press for saying a year ago that he might send troops into Pakistan when, lo and behold, we're sending troops into Pakistan.

Considering we know that Obama doesn't have a problem with starting a war with Pakistan, and McSame doesn't have a problem starting a war with ANYBODY, it seems like Secretary of Defense Robert Gates figured sending in troops and bombs was just getting a jump start on the inevitable declaration of hostilities in January.

But it's cool, we're buying them off with half a billion or so. The Paks aren't going to complain too loudly.

And neither is the American public.

[UPDATE]: Or maybe the Pakistani government will indeed make an issue of this.

In a major development, the federal government on Friday announced disconnection of supply lines to the allied forces stationed in Afghanistan through Pakistan in an apparent reaction to a ground attack on a border village in South Waziristan agency by the Nato forces.

Political authorities of the Khyber Agency claimed to have received verbal directives to immediately halt transportation of all kinds of goods meant for the US-led Nato forces in Afghanistan for an indefinite period.

Authorities claimed the decision was taken in the wake of the growing unrest in the Khyber Agency that provides for the only ground link of the country to the war-torn Afghanistan. "Until now, drivers of the vehicles carrying goods meant for the foreign forces in Afghanistan were directed to reach the tribal agency between 7am to 10am, which were then escorted to the border town of Torkhum by the Khassadar force," the authorities told The News.

The authorities claimed that due to repeated attacks on the personnel of the Khassadar forces during the last one week and abduction of a few personnel, it had become difficult for the security forces to provide foolproof security to the supply lines.

Those pesky US attacks are making it too dangerous to get supplies safely across Pakistan to Afghanistan.

Go figure.

End Run

Apparently the Fed wasn't exactly eager to tell Congress about the Fannie/Freddie bailout plan...in fact most of Congress only heard about it after the Washington Post broke the story on Saturday morning.

Speaker Nancy Pelosi (D-Calif.) got a phone call on Saturday, after the Fannie Mae/Freddie Mac deal had already made it into The Washington Post, according to a Democratic aide.

Minority Leader John Boehner (R-Ohio) also got a call Saturday along with Senate Majority Leader Harry Reid (D-Nev.), Senate and House aides said. Financial Services Chairman Barney Frank was fortunate enough to get a call Friday, considering he wrote the legislation that gave Paulson the power to seize the massive housing agency.

And when they got the news, everyone seemed resigned to accept that there was no other choice but to have the federal government put the under capitalized companies into a receivership.

Course there was no choice. Both stocks are trading around 75 cents now, having lost almost 99 percent of their value since last October. Wall Street's convinced the problem is over.

It's not.

It's just beginning.

It's Not In Hillary's Interest

...to take on Sarah Palin, according to Hillary's point man, good ol' Howard Wolfson.

I have been asked repeatedly over the last several days to respond to the idea that Hillary Clinton will soon be dispatched by the Obama campaign to "take Palin on."

The questions are fair, but what undergirds them is an obsession in our popular culture with the "cat fight," an offensive term that describes the spectacle of two well known women fighting with one another.

On the cover of this week's Entertainment Weekly Shannen Doherty and Jennie Garth discuss punching and scratching one another. Over the weekend it was Oprah Winfrey vs Sarah Palin. Some are so eager for a fight that one well known columnist on Sunday even imagined a 2012 Presidential debate between Senator Clinton and Governor Palin.

For whatever unfortunate reasons, editors and news executives are convinced that two women fighting sells magazines and attracts eyeballs. You can imagine the thinking....if Angelina Jolie vs Jennifer Aniston and Britney Spears vs Christina Aguilera sell copies, what could be better than Hillary Clinton vs Sarah Palin?

Don't hold your breath. It's not going to happen.

It's not in Hillary Clinton's interest, and its certainly not in the interest of Barack Obama and the Democratic party.

You may not remember, but Hillary Clinton is at her best staying positive and contrasting with her opponents on issues. She has already been stumping for Senator Obama leading up to the convention and will be stumping for him as much as Senator Obama wants her to between now and the election.

Secondly, and most importantly, Democrats are running against John McCain, not Sarah Palin. Running against Gov. Palin instead of Senator McCain would be a mistake -- ultimately voters will make their assessments based on the strength and weaknesses of the top of the tickets. If anything, Democrats should be talking about McCain-Bush, not McCain-Palin. Every day we are focused on Palin is a day we are not amplifying the Obama campaign's message that Senator McCain simply represents four more years of President Bush.

Of course it's not in Hillary's interest. If Obama loses, she gets her shot in 2012.

Fannie And Freddie In Freefall

As expected, Fannie and Freddie common stock have plummeted into the toilet.

Fannie Mae's and Freddie Mac's stocks took a dive while their debt soared Monday, as investors bet the U.S. government's takeover of the mortgage finance firms would wipe out shareholders but fully guarantee their bonds.

Equity markets around the world surged on the bailout news as hopes rose that the U.S. Treasury's plan to take control over the companies, which together back about half of the country's $12 trillion in mortgages, might put at least a temporary floor under troubled financial markets.

The Dow Jones industrial average surged over 2 percent, but Fannie Mae's stock got hammered, swooning more than about 80 percent to $1.30. Freddie Mac shares fell more than 75 percent to $1.25.

Many on Wall Street said the takeover of the institutions was merely a symptom of the dismal state of credit markets.

Now keep in mind Fannie Mae's had a 52 week high of $68.90 and Freddie Mac's was $65.88...both of these stocks are now most likely going to be worth less than a dollar by the end of trading today (as I'm looking at my Bloomberg app on my iPhone, FRE stock is at $1.01 and falling here at noon) and will stay there.

A lot of 401(k) funds had Fannie and Freddie stock as part of their portfolios. A whole lot of money just went poof today. Ignore the stock market's Mother Of All Dead Cat Bounces. The underlying problem is still going on.

And having said that, the Dow WAS up 300, and now is up only 125...and that's going down too.

More Liberal Media Nonsense

The venerable Double G weighs in on the MSNBC decision to remove Olbermann and Matthews.

This has been going on for years. As I wrote in response to the uproar generated at places like The New Republic over the fact that MSNBC has now given an actual liberal, Rachel Maddow, her own show and is thereby jeopardizing non-partisan, objective, high-minded journalism:

Over the past seven years, the following people have hosted prime-time cable news shows: Joe Scarborough (MSNBC), Michael Savage (MSNBC), Glenn Beck (CNN), Tucker Carlson (MSNBC), Nancy Grace (CNN), Bill O'Reilly (Fox) and Sean Hannity (Fox). None of that seemed to bother the likes of [TNR's Sacha] Zimmerman. None of that was depicted as the downfall of objective journalism or the destruction of civil, elevated, high-minded discourse.

Several of those hosts had and continue to have atrocious ratings (Carlson, Beck, Scarborough), yet were kept for years.

Beyond that, network and cable shows routinely convene panels filled with right-wing views and devoid of anything remotely approaching liberalism, and that creates no controversy. Just this past weekend, I subjected myself while traveling to ABC's This Week with George Stephanopoulos, and the panel discussing Sarah Palin was composed of right-wing ideologue George Will, establishment-spokesperson Cokie Roberts, and reporter Sam Donaldson. That is typical for television panels: right-wing partisans such as Will are "balanced" not by any liberals but by allegedly "neutral journalists" such as Roberts or Donaldson. That's because the Right has created a reality where anyone who isn't explicitly Rush Limbaugh is deemed to be a "liberal" (hence, Donaldson likely qualifies) and no actual liberal ever needs to be included. That's how we have a "liberal media" where the principal rule is that actual liberals are systematically excluded, and it's why the ascent of Olbermann (who is, in fact, far more of a Bush critic than a doctrinaire liberal) has created such turmoil -- because it violates that central rule prohibiting liberals from appearing in the Liberal Media.

As he points out, the problem is endemic: under the Bush/Fox News regime, anybody who dares to question our great and glorious Permanent Republican Majority is a horrible liberal. Nobody in the media wants to be hit with this tag, because the media has been controlled by the far right for almost two decades now. They assaulted Clinton to the point where he was impeached on a pointless charge, and Bush was hailed as a brilliant President after breaking the law on a number of occasions. We're told by this same "liberal media" that opposing Bush in any way is "bad for the country" and "divisive".

Now we're seeing the same standard applied to McSame. Months of complaints that "the liberal media is in the tank for Obama" (which is patently untrue) has led to this.

Keep in mind that the Right rules our media and most likely always will.

Puff Piece? Pass Please.

Well, fresh off their triumph over MSNBC, the McSame camp now takes aim at neutering the rest of the industry to keep any unwanted Acts Of Actual Journalism to be committed. Josh Marshall documents the coming atrocities at TPM:

I spent most of the day today traveling and then giving a talk up at Union College a few hours north of New York City. So I was offline most of the day. And though I heard about Charlie Gibson bagging the first interview with Sarah Palin, I was eager to get home and read the details.

Well, now I've read them. And it's pretty clear this farce is going to be close to unwatchable. Set aside that this comes just on the heels of McCain campaign manager Rick Davis saying Palin would not sit for any interviews "until the point in time when she'll be treated with respect and deference." The tell comes high up in the AP story by David Bauder. The second graf reads ...

Palin will sit down for multiple interviews with Gibson in Alaska over two days, most likely Thursday and Friday, said McCain adviser Mark Salter.

Political interviews are never done like this. Because it makes the questioning entirely at the discretion of the person being interviewed and their handlers. The interviewer has to be on their best behavior, at least until the last of the 'multiple interviews' because otherwise the subsequent sittings just won't happen. For a political journalist to agree to such terms amounts to a form of self-gelding. The only interviews that are done this way are lifestyle and celebrity interviews. And it's pretty clear that that is what this will be.

The difference between the way Keith Olbermann and Charlie Gibson are being treated is clear: one has been stripped of his campaign coverage hosting duties for daring to anger McSame, the other is getting an exclusive puff piece interview with Sarah Palin. If it's anything like Gibson's performance as debate moderator early this year, this piece will be nothing more than a hatchet job on Obama and Biden. Only this time, nobody will dare say anything about it.

And the propaganda continues to get catapulted.

Diplomacy Is The Art Of Saying "Nice Doggie...

...until you can find the Nameless One to shoot the dog."(h/t Hullabaloo)

In his address to the conference of global political and business leaders, Cheney issued a strong rebuke of Russia. He described Moscow's actions in the conflict with Georgia as an "affront to civilized standards," and called on Western nations to jointly prevent Russia from using its position as a dominant energy supplier to intimidate its neighbors.

He also spoke of Russian arms sales to hostile Mideast nations, saying Moscow "has sold advanced weapons to regimes in Syria and Iran. Some of the Russian weapons sold to Damascus have been channeled to terrorist fighters in Lebanon and Iraq."

According to the Israeli daily Maariv, Cheney touched on the same theme during talks with the Israeli President Shimon Peres, also attending the conference.

With the election seven weeks away, Condi Rice and her State Department realist pussies aren't being allowed anywhere near the Georgia crisis. This is alllllll the Dickster, as Fourthbranch desperately tries to build us a fourth war (in case the attack on Iran by Israel takes longer than expected). Also, if you're wondering what's going on in Georgia in general, here's a good article on the basics.

It is difficult to imagine that the Georgians launched their attack against US wishes. The Georgians rely on the United States, and they were in no position to defy it. This leaves two possibilities. The first is a huge breakdown in intelligence, in which the United States either was unaware of the deployments of Russian forces or knew of them but—along with the Georgians—miscalculated Russia's intentions. The second is that the United States, along with other countries, has viewed Russia through the prism of the 1990s, when its military was in shambles and its government was paralyzed. The United States has not seen Russia make a decisive military move beyond its borders since the Afghan war of the 1970s and 1980s. The Russians had systematically avoided such moves for years. The United States had assumed that they would not risk the consequences of an invasion.

If that was the case, then it points to the central reality of this situation: the Russians had changed dramatically, along with the balance of power in the region. They welcomed the opportunity to drive home the new reality, which was that they could invade Georgia, and the United States and Europe could not meaningfully respond. They did not view the invasion as risky. Militarily, there was no force to counter them. Economically, Russia is an energy exporter doing quite well—indeed, the Europeans need Russian energy even more than the Russians need to sell it to them. Politically, as we shall see, the Americans need the Russians more than the Russians need the Americans. Moscow's calculus was that this was the moment to strike. The Russians had been building up to it for months, and they struck.

Just like Iraq, "we didn't expect the situation on the ground to go like that, etc." Plausible deniablilty is a wonderful thing 3 months before a Presidential election, yes?

Ladies And Gentlemen, Your Liberal Media

The GOP spinmeisters have gotten to MSNBC, who are dropping Olberman and Chris Matthews as their election coverage hosts.

MSNBC is removing Keith Olbermann and Chris Matthews as the anchors of live political events, bowing to growing criticism that they are too opinionated to be seen as neutral in the heat of the presidential campaign.

David Gregory, the NBC newsman and White House correspondent who also hosts a program on MSNBC, will take over during such events as this fall's presidential and vice presidential debates and election night.

The move, confirmed by spokesmen for both networks, follows increasingly loud complaints about Olbermann's anchor role at the Democratic and Republican conventions. Olbermann, who regularly assails President Bush and GOP nominee John McCain on his "Countdown" program, was effusive in praising the acceptance speech of Democratic nominee Barack Obama. He drew flak Thursday when the Republicans played a video that included a tribute to the victims of the Sept. 11 attacks, saying that if the networks had done that, "we would be rightly eviscerated at all quarters, perhaps by the Republican Party itself, for exploiting the memories of the dead, and perhaps even for trying to evoke that pain again. If you reacted to that videotape the way I did, I apologize."

Matthews, who has criticized politicians in both parties, drew less criticism for his convention role but became a divisive figure during the primaries when he described how he was inspired by Obama's speeches and made disparaging remarks about Hillary Clinton, for which he later apologized.

In May, MSNBC President Phil Griffin said in an interview that during live events Olbermann and Matthews "put on different hats. I think the audience gets it. . . . I see zero problem."

And yet FOX News, an entire network that really IS the propaganda arm of the Republican Party, operates with impunity. Olbermann's days are numbered, as is Matthews, as is Rachel Maddow. There's no room for a liberal viewpoint on American news channels. The GOP is always right, the Democrats are always scum.



The fix is in folks. McSame's had an 11-point turnaround in the Gallup polls since Labor Day. It's time for Obama and Biden to go to work. There's no way they can get a positive message out anymore, because any message positive to the Democrats is "proof of liberal media bias."

If they don't start fighting back NOW, it's over. McSame will run away with this.

And we will have earned our fate.

StupidiNews!

• World stock markets are rallying this morning on the Fannie and Freddie takeover news.
• Hurricane Ike is trashing Cuba on his way to the Gulf of Mexico.
• Iran is conducting more war games focusing on "anti-aircraft defense systems."
• Human Rights Watch is blasting the US on recent civilian deaths in Afghanistan.
• Google has exclusive image and mapping rights from a new Boeing satellite.

McFail

The NY Times' Frank Rich takes McSame-Palin out back with the literary equivalent of a Louisville Slugger and goes to town.

Given the actuarial odds that could make Palin our 45th president, it would be helpful to know who this mystery woman actually is. Meanwhile, two eternal axioms of our politics remain in place. Americans vote for the top of the ticket, not the bottom. And in judging the top of the ticket, voters look first at the candidates’ maiden executive decision, their selection of running mates. Whatever we do and don’t know about Palin’s character at this point, there is no ambiguity in what her ascent tells us about McCain’s character and potential presidency.

He wanted to choose the pro-abortion-rights Joe Lieberman as his vice president. If he were still a true maverick, he would have done so. But instead he chose partisanship and politics over country. “God only made one John McCain, and he is his own man,” said the shafted Lieberman in his own tedious convention speech last week. What a pathetic dupe. McCain is now the man of James Dobson and Tony Perkins. The “no surrender” warrior surrendered to the agents of intolerance not just by dumping his pal for Palin but by moving so far to the right on abortion that even Cindy McCain seemed unaware of his radical shift when being interviewed by Katie Couric last week.

That ideological sellout, unfortunately, was not the worst leadership trait the last-minute vice presidential pick revealed about McCain. His speed-dating of Palin reaffirmed a more dangerous personality tic that has dogged his entire career. His decision-making process is impetuous and, in its Bush-like preference for gut instinct over facts, potentially reckless.

As The New York Times reported last Tuesday, Palin was sloppily vetted, at best. McCain operatives and some of their press surrogates responded to this revelation by trying to discredit The Times article. After all, The Washington Post had cited McCain aides (including his campaign manager, Rick Davis) last weekend to assure us that Palin had a “full vetting process.” She had been subjected to “an F.B.I. background check,” we were told, and “the McCain camp had reviewed everything it could find on her.”

The Times had it right. The McCain campaign’s claims of a “full vetting process” for Palin were as much a lie as the biographical details they’ve invented for her. There was no F.B.I. background check. The Times found no evidence that a McCain representative spoke to anyone in the State Legislature or business community. Nor did anyone talk to the fired state public safety commissioner at the center of the Palin ethics investigation. No McCain researcher even bothered to consult the relevant back issues of the Wasilla paper. Apparently when McCain said in June that his vice presidential vetting process was basically “a Google,” he wasn’t joking.

This is a roll of the dice beyond even Bill Clinton’s imagination. “Often my haste is a mistake,” McCain conceded in his 2002 memoir, “but I live with the consequences without complaint.” Well, maybe it’s fine if he wants to live with the consequences, but what about his country? Should the unexamined Palin prove unfit to serve at the pinnacle of American power, it will be too late for the rest of us to complain.

We’ve already seen where such visceral decision-making by McCain can lead. In October 2001, he speculated that Saddam Hussein might have been behind the anthrax attacks in America. That same month he out-Cheneyed Cheney in his repeated public insistence that Iraq had a role in 9/11 — even after both American and foreign intelligence services found that unlikely. He was similarly rash in his reading of the supposed evidence of Saddam’s W.M.D. and in his estimate of the number of troops needed to occupy Iraq. (McCain told MSNBC in late 2001 that we could do with fewer than 100,000.) It wasn’t until months after “Mission Accomplished” that he called for more American forces to be tossed into the bloodbath. The whole fiasco might have been prevented had he listened to those like Gen. Eric Shinseki who faulted the Rumsfeld war plan from the start.

In other words, McCain’s hasty vetting of Palin was all too reminiscent of his grave dereliction of due diligence on the war. He has been no less hasty in implying that we might somehow ride to the military rescue of Georgia (“Today, we are all Georgians”) or in reaffirming as late as December 2007 that the crumbling anti-democratic regime of Pervez Musharraf deserved “the benefit of the doubt” even as it was enabling the resurgence of the Taliban and Al Qaeda. McCain’s blanket endorsement of Bush administration policy in Pakistan could have consequences for years to come.

“This election is not about issues” so much as the candidates’ images, said the McCain campaign manager, Davis, in one of the season’s most notable pronouncements. Going into the Republican convention, we thought we knew what he meant: the McCain strategy is about tearing down Obama. But last week made clear that the McCain campaign will be equally ruthless about deflecting attention from its own candidate’s deterioration.

Read the whole thing.

Paulson Lays It Out

Hammerin' Hank Paulson lays out the specifics for the Fannie-Freddie takeover, consisting of four steps:

To promote stability in the secondary mortgage market and lower the cost of funding, the GSEs will modestly increase their MBS portfolios through the end of 2009. Then, to address systemic risk, in 2010 their portfolios will begin to be gradually reduced at the rate of 10 percent per year, largely through natural run off, eventually stabilizing at a lower, less risky size.

1) Throw good money after bad, check.

Treasury and FHFA have established Preferred Stock Purchase Agreements, contractual agreements between the Treasury and the conserved entities. Under these agreements, Treasury will ensure that each company maintains a positive net worth. These agreements support market stability by providing additional security and clarity to GSE debt holders – senior and subordinated – and support mortgage availability by providing additional confidence to investors in GSE mortgage backed securities. This commitment will eliminate any mandatory triggering of receivership and will ensure that the conserved entities have the ability to fulfill their financial obligations. It is more efficient than a one-time equity injection, because it will be used only as needed and on terms that Treasury has set. With this agreement, Treasury receives senior preferred equity shares and warrants that protect taxpayers. Additionally, under the terms of the agreement, common and preferred shareholders bear losses ahead of the new government senior preferred shares.

2) Dump the losses on common stockholders, check.

The [next] step Treasury is taking today is the establishment of a new secured lending credit facility which will be available to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Given the combination of actions we are taking, including the Preferred Share Purchase Agreements, we expect the GSEs to be in a stronger position to fund their regular business activities in the capital markets. This facility is intended to serve as an ultimate liquidity backstop, in essence, implementing the temporary liquidity backstop authority granted by Congress in July, and will be available until those authorities expire in December 2009.

3) Keep more good money around to throw after the bad money, because it will be needed, check.

Finally, to further support the availability of mortgage financing for millions of Americans, Treasury is initiating a temporary program to purchase GSE MBS. During this ongoing housing correction, the GSE portfolios have been constrained, both by their own capital situation and by regulatory efforts to address systemic risk. As the GSEs have grappled with their difficulties, we’ve seen mortgage rate spreads to Treasuries widen, making mortgages less affordable for homebuyers. While the GSEs are expected to moderately increase the size of their portfolios over the next 15 months through prudent mortgage purchases, complementary government efforts can aid mortgage affordability. Treasury will begin this new program later this month, investing in new GSE MBS. Additional purchases will be made as deemed appropriate. Given that Treasury can hold these securities to maturity, the spreads between Treasury issuances and GSE MBS indicate that there is no reason to expect taxpayer losses from this program, and, in fact, it could produce gains. This program will also expire with the Treasury’s temporary authorities in December 2009.

4) Use the good money to buy the preferred shares and hope home prices go up giving us the government the profit while stockholders foot the losses, and we expect this profit to roll in when housing prices go back up which they will any day now, yep, check.

Screw the little guy. And of course Treasury has been so dependably right about the economy so far, we shouldn't worry at all!

Does anyone think Wall Street will buy this? I mean odds are pretty good we'll soon be nationalizing more industries as well pretty soon. Let's be honest here, the government just nationalized the mortgage industry. More will follow.

More Fannie And Freddie Follies

As we await details of the Sunday Night Rescue of Fannie and Freddie, we learn today what prompted action by the Fed this weekend: Freddie's accountants were lying to the American people.

The government’s planned takeover of Fannie Mae and Freddie Mac, expected to be announced on Sunday, came together after advisers poring over the companies’ books for the Treasury Department concluded that Freddie’s accounting methods had overstated its capital cushion, according to regulatory officials briefed on the matter.

The proposal to place both companies, which own or back $5.3 trillion in mortgages, into a government-run conservatorship also grew out of deep concern among foreign investors that the companies’ debt might not be repaid. Falling home prices, which are expected to lead to more defaults among the mortgages held or guaranteed by Fannie and Freddie, contributed to the urgency, regulators said.

Investors who own the companies’ common and preferred stock will suffer. Holders of debt, including many foreign central banks, are expected to receive government backing. Top executives of both companies will be pushed out, according to those briefed on the plan.

The cost of the government’s intervention could rise into tens of billions of dollars and will probably be among the most expensive rescues ever financed by taxpayers.

Got that?

1. Freddie Mac's accountants lied. They were much worse off in reality.
   
2. The housing market will continue to fall, meaning more losses for Fannie and Freddie.
3. Foreign Central Banks will get paid. Stockholders will get wiped out.
4. It will cost billions of our taxpayer dollars.
   

It gets worse.

“We have just had to nationalize the two largest financial institutions in the world because of policy makers’ inaction,” said Josh Rosner, an analyst at Graham Fisher, an independent research firm in New York, and a longtime critic of the government-sponsored enterprises. “Since 2003, when these companies’ accounting came under question, policy makers have done nothing.”

But only the losses are nationalized. The revenues will not be. Holders of preferred stock will continue to get money. Holders of common stock will get wiped out.

We're rapidly becoming a country of socialized losses and privitized profits. And nothing that I've seen from either candidate makes me think anything will change.

[UPDATE 11:28 AM:] Its official, the regulatory agency that monitors Fannie and Freddie, the FHFA, now is running both companies.

And yes, this means common stock in both companies has just been wiped out as worthless paper.

A Day Of Truce

Thursday is the 7th anniversary of 9/11, and both Obama and McSame are planning to take a day off from whaling on each other and will make a joint appearance at Ground Zero.

The Democratic and Republican presidential nominees, in a statement, said they will appear together at the World Trade Center site on Thursday "to honor the memory of each and every American who died" in the 2001 attacks.

The campaigns already had agreed to suspend television advertising critical of each other on Sept. 11. The McCain campaign has said it will air no ads that day.

Both campaigns have been running negative television ads and, at the just-concluded political conventions, pulled no punches in exploiting partisan differences.

Obama and McCain said Thursday will be different.

"All of us came together on 9/11 — not as Democrats or Republicans — but as Americans," they said. "We were united as one American family. On Thursday, we will put aside politics and come together to renew that unity."

What I fear this will turn into is each side pledging it will be the first to bomb Iran into a melted glass parking lot if it looks at Israel cross-eyed.

But then I don't expect that to change no matter who is in the White House, and it would have been the same if it was Hillary, Huckabee, Romney, Edwards, or anybody else running from these two parties.